Managing the sales force

Dr. Karpagam
Director – Academics
ISBR Business School
Bangalore
 Chapter outline

• Effective Recruiting
• Selecting and training the sales force
• Time and territory Management
• Sales territories and sales quotas
• Compensating sales force
• Motivating the sales force
• Controlling the sales force
• Evaluating the sales force
 Learning outcomes

After reading this chapter, you will be able to

understand
 What is effective recruiting ?
 How to select and train the sales force?
 How to devise sales territories and sales quotas ?
 What are the different compensation methods
available ?
 Why should we motivate the sales people ?
 How to control the sales & evaluate the sales force ?
 Effective recruitment

• Recruiting and selection of sales personnel varies

from company to company
– Company Size
– Executives’ Personalities
– Departmental Structure
• Sources of Sales Force Recruits
– Sources within the company
– Sources outside the company
 The recruiting effort

• Seeks Individual with minimum or general education

Trade Selling • Little or no experience

• High caliber individuals with specialized education

Missionary Selling • Equivalent qualification gained through job
experience

• High caliber Individuals with scientific or

Technical Selling engineering education

New Business • Management looks for individuals with the required

Selling abilities
 Selecting the sales personnel
Employment offer

Physical examination

Testing

Reference & credit checks

E x p e n s e

Relative degree
of helpfulness
Interview(s)

Formal Application

Preliminary
Interview

Reject

Time
Time
 Selection process

• Interview
– Who should be doing the interviewing ?
– How many interviews ?
– Interviewing the spouse
• Interview techniques :
– Patterned interview
– Nondirective interview
– Interaction interview
– Rating scales
 Types of tests

1. Test of ability :
– How well a person can perform particular tasks with maximum
motivation
– Mental ability ( intelligence test)
– Aptitude test ( special abilities )
2. Test of habitual characteristics :
– Gauge how prospective employees act in their daily work
normally
– Attitude, personality and interest test
3. Achievement Test :
– How much individuals have learned from their experience,
training or education
 Training the sales force

Who ?
Why ? What ? How ?
When ?
Where ?

Aim(s) Content Method(S) Execution Evaluation

Recycle, Redesign, Modify and so forth

 Philosophies of sales training

• Two philosophies of sales training

– Conditioned Response
• Behave in a standardized or programmed ways
– Insight Response
• Seeks to develop trainees insight and analytical skills
so that they respond appropriately
• Which philosophy is appropriate ?
– The choice depends upon predominant selling style
• Trade or Missionary – Conditioned response
• Technical or new business – Insight Response
 Organization for sales training

• The execution step of ACMEE (the first ) requires

four key organizational decisions:
1. Who will be the trainees ?
2. Who will do the training ?
3. When will the training take place
4. Where will the training site be ?
 Who will be the trainees ?

• Very complex for continuing than initial sales training

• Criteria to select the trainees :

Reward for good process

Punishment for poor

performance

Convenience of trainee and

trainer

Seniority (greater the seniority,

greater the opportunity for
added training)
 Who will do the training

Outside
experts
Training
the sales
Sales
training
training
Continuing
staff
sales
Initial
training
sales
training
 When will the training take place ?

• Timing group versus individual training

– Minority view
– Minority view inappropriate when technical selling is
involved
• Timing initial sales training programs :
– Depends upon
• The size of the sales force
• Sales personnel turnover
• Management’s plans for changing sales force size
• Timing continuing sales training programs
– Weaknesses lie in different areas, on the job coaching
– Several people are weak in the same area, use instructional
method
 Sales Motivation is Critical

• Influenced by Sales Manager

• Even More Important for Salespeople
• Freedom of Supervison
• Lack of Faith in Themselves
• Lack of Faith in Their Brands
 Motivation Includes

• Drive to Initiate Action on a Task

• Drive to Put Forth Sufficient Effort on a Task
• Persistence to Maintain Effort Over Time
 Motivation is INTERNAL

• Manager Influences
• Manager Cannot Create
• Can Increase Chances
• But Easier to Destroy
 Maslow

• You have had this before

• Physiological and Safety/Security Needs are First
– For Good Reason
• What Motivates Changes Over Time (and
Environment)
• Salespeople satisfied by pay are less interested in
higher pay
 Herzberg

• Dissatisfaction must be removed before motivation

• Perceived Inequity in Pay,
• Company Policy,
• Working Conditions or Relationships kill motivation
• Removing Dissatisfaction Motivation
 Herzberg #2

• Motivation is associated with:

– Achievement
– Recognition
– Challenging Work
– Advancement
 Herzberg Useful?

• Have Clear Policies and Procedures

– Don’t have to be equal but must be seen as “fair”
• Pay is not a great motivator – but is a great
demotivator (Do Not Make Salary Info Public)
• Non Pay Factors are Key to Motivation
 Expectancy Useful?

• Working Stupid Kills Motivation

• If Salesperson Thinks the Goal Cannot Be Reached
they Give Up or Cheat
• The Performance + Goal Link is Essential
• Are The Rewards Even Important to the Individual?
 Expectancy Useful?

• Working Hard & Smart Are Both Critical

• Skills Training is Vital
• Do Not Ever Over-Promise
• Be Sure Everyone Has the Chance to Succeed
• Give Rewards People Want
 Compensating sales personnel

• A sales compensation plan properly designed, has

three motivational roles :
1. Provide a living wage
2. Adjust pay level to performance
3. Provide a mechanism for demonstrating the congruency
between attaining company goals and individuals goals
 Requirements of a good sales plan

1. Provides a living wage

2. Plan fits with the rest of the motivational program
3. The plan is fair
4. Easy to calculate own earnings
5. Adjusts pay to changes in performance
6. Economical to administer
7. Helps in attaining the objectives of the sales
organization
Types of compensation plans

Combination of
salary and
variable elements

Straight
commission

Straight salary
 Straight salary plan

• More common among industrial goods companies

• Used for personnel engaged in trade selling
• Economical to administer, because of simplicity
• Provides freedom from financial uncertainties
• Disadvantages :
1. Do average job than outstanding job
2. Undercompensate productive salesperson and overcompensate
poor performers.
 Straight commission plan

• Paid according to productivity

• Sales volume is the best productivity measure
• Falls under two category :
– Straight commission with sales personnel paying their own
expenses, advances may or may not be made against earned
commissions
– Straight commission with the company paying expenses,
with or without advances against earned commissions.
• Used in order getting than nonselling duties
 Cont’d…

• Common in
– Clothing, textile, and shoe industries and in drug and
hardware wholesaling
• Applicable to firms selling intangibles :
– Insurance and investment securities, and manufactures of
furniture, office equipment and business machines.
• Advantages :
– Direct monetary incentive
– Means of cost control
 Cont’d

• Disadvantages :
– Unless differential commission rates are used, sales
personnel push
• the easiest to sell Low margin items
• Neglect harder to sell high margin items
– Sales person’s efficiency may decline because of income
uncertainties
 Combination salary and incentive plan

• Straight salary method :

– Lacks a financial means for stimulating the sales force to
greater effort.
• Straight Commission method :
– The executive has weak financial control over nonselling
activities
• Blending – management seeks control and motivation
• Actual results depends on management’s skills in
– Designing and administering plans
 Use of Bonuses

• Bonuses are different from commissions

– It is an amount paid for accomplishing a specific task
• Commission :
– Varies in amount with sales volume or other commission
base
• Bonuses are
– Paid for reaching a sales quota
– Performing promotional activities
– Obtaining new accounts
– Following up leads
 Sales territories

• Establishing sales terrioroties facilitates

– matching selling efforts with sales opportunities
• Territorial assignments lend direction to the planning
and control of sales operations
• Realistic sales planning is done on a territory-by-
territory basis
• Sales territory :
– Grouping of customers and prospects assigned to an
individual salesperson
 Reasons for establishing or revising sales
territories
1. To provide proper market coverage
2. To control selling expenses
3. To assist in evaluating sales personnel
4. To contribute to sales force morale
5. To aid in the coordination of personal selling and
advertising efforts
 Procedure for setting up or revising sales
territories
Selecting a basic geographical
control unit

Determining sales potential in

control units

Combining control units into

tentative territories

Adjusting for coverage difficulty

and restricting tentative territories
Territory shape (tentative territories
 Sales quota

• Quantitative objectives assigned to sales

organizational units
• Quotas are devices for directing and controlling sales
operations
• In effective systems,
– Management bases quotas on information derived from
sales forecasts
– studies of market and sales potentials
– Cost estimates
 Objectives in using quotas

To provide quantitative performance standards

To obtain tighter sales and expense control

To motivate desired performance

To use in connection with sales contests

 Types of quota and quota-setting
procedures
• Differences in forecasting and budgeting procedure,
quotas fall into four categories :
1. Sales volume quotas
2. Budget
3. Activity
4. combination
 Procedure for setting sales quota

• Sales volume quotas derived from

1. Territorial sales potential
2. Total market estimates
3. Past sales experience alone
4. Executive judgement alone
5. Compensation plan
Controlling sales personnel : evaluating and
supervising

Establishing
performance
standards

Recording
Taking action
performance

Evaluating
performances
against the
standards
 Cont’d…

• Control has both static and dynamic facets

• Depending on the circumstances, management may
decide to take
1. “no action" now
2. Aimed to increase the degree of attainment of objectives
3. To revise the policy or plan or the strategies used in their
implementation to facilitate achievement of objectives
4. To lower or raise the objective standard or criteria for
measuring their degree of attainment.